EXHIBIT 10.1
ORGANIZATION AGREEMENT
This ORGANIZATION AGREEMENT ("Agreement"), dated as of August 7th, 2000
("Effective Date") is made and entered into by and between CyberOptics
Communications Corporation, a Delaware corporation ("CO3") and CyberOptics
Corporation, a Minnesota corporation ("CYBE").
WHEREAS, CO3 is a newly formed corporation that intends to engage in
the development of equipment that assembles photonics components and
subassemblies for use in products for fiber optic telecommunications, the
manufacture of photonics components and subassemblies for use in products for
fiber optic telecommunications, and such other businesses as it may in the
future choose to pursue;
WHEREAS, CYBE has developed technology, including patented and
unpatented know how, trade secrets, copyrighted works and other intellectual
property, a portion of which CO3 desires to use in developing its business;
WHEREAS, CYBE has financed certain organizational expenses of CO3 while
CO3 was developing its business plan, including travel, employee and related
expenses;
WHEREAS, CYBE desires to acquire an equity interest in CO3 in
consideration of the contribution of such organizational expenses, a license to
certain CYBE intellectual property, a release of certain current CYBE employees
whom CO3 wishes to retain, and additional cash contributions to CO3's capital;
WHEREAS, CO3 desires to use certain CYBE facilities and obtain certain
support from CYBE in furtherance of CO3's business objectives;
WHEREAS, CYBE has been approached by Nortel Networks ("Nortel") to
develop an inspection system for fiber optic telecommunications components but
does not wish to devote its engineering resources to investigate or complete
such an inspection system; and
WHEREAS, CYBE wishes to engage CO3 to develop such an inspection system
in consideration for certain payments by CYBE and certain exclusive distribution
rights for such product upon the completion of development.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used in this Agreement have the meanings set forth in
this Article I:
1.01 "AFFILIATE" as applied to a party, means a corporation or other
business organization, which is controlled by, or is under common control with
that party. As used in this definition, "control" means the power through equity
ownership, voting rights or joint venture agreement to direct the affairs of
another corporation or business organization. The parties agree that CO3 is not
an Affiliate of CYBE under the provisions of this Paragraph.
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1.02 "CO3 INTELLECTUAL PROPERTY" means any or all of the: (a) patents,
patent applications, reissues, divisions, continuations, continuations-in-part,
re-examinations, invention certificates and patents of addition, U.S. or
otherwise, which are owned, controlled or otherwise licensable by CO3; (b)
copyrights and works of expression protectable under 35 U.S.C. 401 et seq.,
which are owned, controlled or otherwise licensable by CO3; and (c) CO3 trade
secrets and proprietary procedures and information which derive their value by
not being generally known, for manufacturing and developing products, and for
providing services, which are owned, controlled or otherwise licensable by CO3;
including in each case any proprietary know-how necessary to implement the
foregoing, or any other intellectual property as to which CO3 has rights.
1.03 "CHANGE OF CONTROL" as applied to a party, means: (1) a merger or
consolidation after which the shareholders of the party (other than the party
acquiring control) hold less than fifty-percent (50%) of the voting securities
of the surviving entity; (2) a sale of all or substantially all the of the
assets of the party; or (3) the acquisition by a person, or group of persons
acting in concert (other than a person who is a shareholder of such party on the
date of this Agreement), of beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934) of fifty-percent (50%) or more of the
voting securities of such party.
1.04 "CONDITIONALLY IRREVOCABLE" means: (1) when used in the context of
a license being granted to CO3, that the license is perpetually irrevocable,
except that if CO3 has ceased all business activities for a period of two (2)
months the license will terminate and be revoked effective as of the expiration
date of such two (2) month period; provided, however, that such conditional
revocability will expire and such license will be irrevocable without condition
on the earlier of: (a) the date of a Change of Control of CO3; or (b) the date
CO3 becomes subject to the reporting requirements contained in Article 15(d) or
13(a) of the Securities Exchange Act of 1934, as amended; and (2) when used in
the context of a license being granted to CYBE, that the license is perpetually
irrevocable, except if CYBE has ceased all business activities for a period of
two (2) months the license will terminate and be revoked effective as of the
expiration date of such two (2) month period.
1.05 "CONFIDENTIAL INFORMATION" means any information, technical data,
trade secrets or know-how related to any aspect of either party's business,
including, but not limited to, CO3 Intellectual Property, CYBE Intellectual
Property, proposals, software, services, development, inventions, processes,
designs, drawings, engineering information, customer lists, marketing plans and
data, employee lists and financial information which is directly or indirectly
disclosed by one party to the other regardless of the form in which it is
disclosed or in the manner in which it was obtained including, but not limited
to, the inspection of products, materials, parts, equipment or computer code.
For purposes of this Agreement, Confidential Information does not include any
information which:
(a) is publicly known at the time of its disclosure;
(b) is published or otherwise made known to the public without
breach of this Agreement; or
(c) was generated independently by a party without use of the
other party's Confidential Information.
1.06 "CYBE ASSEMBLY COPYRIGHTS" means, and is specifically limited to,
the copyrights and works of expression protectable under 35 U.S.C. 401 et seq.,
which are owned, controlled or otherwise licensable by CYBE, and set forth in
Exhibit C. CO3 may, at any time, request the addition of copyrights for
inclusion in Exhibit C, which CYBE will review and, in good faith, consider for
addition to such Exhibit C.
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1.07 "CYBE ASSEMBLY INTELLECTUAL PROPERTY" means, and is limited to,
the CYBE Assembly Copyrights, CYBE Assembly Patents and CYBE Assembly Trade
Secrets.
1.08 "CYBE ASSEMBLY PATENTS" means, and is specifically limited to, the
patents, patent applications, reissues, divisions, continuations,
continuations-in-part, re-examinations, invention certificates and patents of
addition, U.S. or otherwise, which are owned, controlled or otherwise licensable
by CYBE, deriving priority, in whole or in part, from the patent application
serial numbers set forth in Exhibit A. CO3 may, at any time, request the
addition of patents for inclusion in Exhibit A, which CYBE will review and, in
good faith, consider for addition to such Exhibit A.
1.09 "CYBE TRADEMARK" means the registered and unregistered trademarks,
foreign and domestic, for the name "CyberOptics".
1.10 "CYBE ASSEMBLY TRADE SECRETS" means, and is limited to, the trade
secrets and proprietary procedures and information which derive their value by
not being generally known, for manufacturing and developing products, and for
providing services, which CYBE is using as the Effective Date, that are: (1)
summarized in Appendix B; or (2) known to any Former CYBE Employee and which
relate to the Photonics Assembly Market.
1.11 "CYBE INTELLECTUAL PROPERTY" means any and all: (a) patents,
patent applications, reissues, divisions, continuations, continuations-in-part,
re-examinations, invention certificates and patents of addition, U.S. or
otherwise, which are owned, controlled or otherwise licensable by CYBE; (b)
copyrights and works of expression protectable under 35 U.S.C. 401 et seq.,
which are owned, controlled or otherwise licensable by CYBE; and (c) trade
secrets and proprietary procedures and information which derive their value by
not being generally known, for manufacturing and developing products, and for
providing services, which are owned, controlled or otherwise licensable by CYBE;
including in each case any proprietary know-how necessary to implement the
foregoing, or any other intellectual property as to which CYBE has rights.
1.12 "DERIVATIVE WORK" means a work that is based upon one or more
preexisting works, such as revision, modification, translation, abridgement,
condensation, expansion, or any other form in which such preexisting works may
be recast, transformed, or adapted and that, if prepared without authorization
of the owner of the preexisting work, would constitute copyright, patent or
other infringement.
1.13 "DEVELOPED INSPECTION SYSTEM TECHNOLOGY RIGHTS" means: (1) any or
all of the: (a) patents, patent applications, reissues, divisions,
continuations, continuations-in-part, re-examinations, invention certificates
and patents of addition, U.S. or otherwise, based on inventions first conceived
or reduced to practice by CO3 in the performance of the Development Project; and
(b) the copyrights and works of expression protectable under 35 U.S.C. 401 et
seq. first developed, conceived or reduced to practice by CO3 in the performance
of the Development Project; and (c) CO3 trade secrets and proprietary procedures
and information which derive their value by not being generally known, for
manufacturing and developing products, and for providing services, in each case
first developed, conceived or reduced to practice by CO3 in the performance of
the Development Project; and (2) all Inventions or other intellectual property
(patents, copyrights, trade secrets or otherwise) or proprietary rights
incorporated in or related to Photonics Inspection System and Photonics
Inspection Product Line.
1.14 "DEVELOPMENT PROJECT" means the efforts of CO3 to develop the
Photonics Inspection System Photonics Inspection Product Line pursuant to
Article III of this Agreement.
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1.15 "EQUIPMENT" means the laboratory equipment contained in the
research lab established by CYBE prior to the date of this Agreement, set forth
in the attached Schedule I.
1.16 "FORMER CYBE EMPLOYEES" means each of the individuals identified
on the attached Schedule II.
1.17 "INSPECTION EQUIPMENT MARKET" means the business of designing,
developing, manufacturing, using, licensing or selling equipment that has as its
primary purpose the optical or non-contact inspection, measurement, or alignment
of wafers, die, components, panels and subassemblies in the electronics, SMT,
semiconductor, disk drive, flat panel display and related markets.
1.18 "INVENTIONS" means any and all improvements, discoveries, designs
or implementations, whether or not patentable, created, conceived or first
reduced to practice in the performance of the Development Project, including,
without limitation, all patents and patent applications based on the foregoing
or any portion thereof.
1.19 "KNOW-HOW" means any and all information related to a specified
project, service or product (including a product's design, development,
manufacture, repair, application, materials, parts and supplier lists for such
materials and parts), including, without limitation, all documentation, data,
designs, drawings, flow charts, diagrams, firmware, software programs and code,
formulas, compilations, methods and other tangible or intangible materials or
information of any nature whatsoever related to such project, service or
product.
1.20 "ORGANIZATIONAL EXPENSES" means, prior to July 1, 2000, all
expenses and costs of any kind, including, without limitation, costs related to
the time spent by the Former CYBE Employees, by Xx. Xxxxxx X. Case (in his role
as an employee of CYBE), by the professional advisers (including independent
accountants and legal counsel) of CYBE, by the internal personnel of CYBE and by
any other party, for which CYBE has funded the cost, and any related travel or
other out of pocket costs, incurred by CYBE with respect to the business and
business plan of CO3; provided, however, that such expenses or costs exclude the
cost of the market study in the amount of $33,600, and the cost of computers in
the amount of $17,389, for which CO3 will pay CYBE said amounts within thirty
(30) days of CYBE's invoice to CO3 therefor.
1.21 "PHOTONICS ASSEMBLY PRODUCTS" means any services, equipment,
software, subassembly or component designed, manufactured, used, licensed and
sold for the Photonics Assembly Market, excluding the Photonics Inspection
System, Photonics Inspection Product Line, or Derivative Works thereof.
1.22 "PHOTONICS ASSEMBLY MARKET" means (a) the business of designing,
developing, manufacturing, using, licensing or selling equipment that assembles
photonic components and subassemblies for use in the fiber optic
telecommunications market; and (b) the business of designing, developing,
manufacturing, using, licensing or selling photonics components and
subassemblies for use in the fiber optic telecommunications markets. It is
understood that the equipment covered by the definition of this paragraph may
include an inspection function embedded in such equipment, except that in any
event, the scope of this definition excludes equipment which has as its primary
purpose the inspection of components, subassemblies or the like (e.g., "stand
alone inspection equipment").
1.23 "PHOTONICS INSPECTION SYSTEM" means the system for the inspection
of fiber optic telecommunications components, initially considered for
development by CYBE for Nortel, based on or derivative of any of the CYBE
Intellectual Property, and proposed to include an integration of the proprietary
SE 300 hardware and XXX Software, and extensions and Derivative Works thereon.
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1.24 "PHOTONICS INSPECTION PRODUCT LINE" means the Photonics Inspection
System and all products derivative of, replacing, extending, or otherwise
performing the functions of the Photonics Inspection System as equipment for the
inspection of fiber optic telecommunications components, or as equipment whose
primary purpose is inspection, rather than manufacture or assembly, of fiber
optic telecommunications components.
1.25 "XXX SOFTWARE" means the software known as the Statistical
Appearance Modeling Software developed by CyberOptics Ltd., used in the KS 100
Inspection System, as in existence on the Effective Date of this Agreement.
1.26 "SHARES" means the 3,800,000 shares of common stock acquired
pursuant to Article 2.02 of this Agreement.
1.27 "THIRD PARTIES" means parties which are not CYBE, its Affiliates,
nor CO3.
ARTICLE II.
CAPITAL CONTRIBUTION / EQUITY INTEREST IN CO3 / BUSINESS FORMS
2.01 CYBE'S CAPITAL CONTRIBUTION. Upon the terms and conditions set
forth in this Agreement, and in consideration of the issuance by CO3 of the
Shares as provided in Article 2.02 below, CYBE hereby contributes to CO3 the
following property and rights (the "Capital Contribution"):
(a) The licenses set forth in Article IV of this Agreement;
(b) Title to the Equipment in accordance with a xxxx of sale in a
form to be agreed upon by the parties;
(c) The accumulated Organizational Expenses funded by CYBE through
June 30, 2000;
(d) The business forms and resources referred to in Article 2.04;
(e) The right to hire the Former CYBE Employees;
(f) The contract relating to, and the right to pursue, the
development of the Photonics Inspection System; and
(g) Cash in the amount of $190,000.
2.02 ISSUANCE OF COMMON STOCK. In consideration of CYBE's Capital
Contribution, upon the terms and subject to the conditions set forth in this
Agreement, CO3 will issue to CYBE 3,800,000 shares of CO3's Common Stock (the
"Shares") at a per share purchase price of $0.10 per share, it being
acknowledged and agreed by the parties hereto that the aggregate value of the
Capital Contribution set forth in Article 2.01(a) above is equal to $380,000.
2.03 INVESTMENT INTENT/RESTRICTIONS ON TRANSFERS. CYBE acknowledges
that it is acquiring the Shares for its own account and with investment intent
and that it understands that the Shares are only transferable pursuant to: (a)
registration under the Securities Act; or (b) an exemption from such
registration. Each certificate representing Shares will be endorsed with the
following legend:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to this corporation
that such transfer may lawfully be made without registration under the
Federal Securities Act of 1933 and all applicable state securities laws
or (ii) such registration."
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2.04 BUSINESS FORMS AND RESOURCES. CYBE agrees to provide CO3 with
access to, and copies of, business forms and other written and electronic media
resources used by CYBE in its business that CO3 might reasonably find useful in
connection with its business, including without limitation, contract and
business forms, product sale terms and conditions, presentation overheads and
PowerPoint presentations, ISO documentation and quality manuals, employee offer
letters and the like. CYBE hereby grants to CO3 a nontransferable, worldwide,
nonexclusive, Conditionally Irrevocable, fully paid-up license to use any such
materials internally for its business. In no event shall such forms or other
resources include access to or replication of CYBE's network or information or
materials thereof, except as agreed to by CYBE in writing in its sole
discretion. Unless otherwise agreed by CYBE in writing, CO3 shall attribute
CYBE's copyright ownership in such forms and resources. CO3 shall keep and treat
the aforesaid ISO documentation and other forms or resources marked as
"confidential" or "proprietary" as Confidential Information of CYBE as described
in Article 5.02.
ARTICLE III.
DEVELOPMENT AND DISTRIBUTION BY CO3 OF INSPECTION SYSTEM
3.01 DEVELOPMENT PROJECT.
(a) Development by CO3. CYBE hereby assigns to CO3 the opportunity
presented to CYBE to develop the Photonics Inspection System. For the
consideration set forth in Article 3.02 below, CO3 will use its
commercially reasonable efforts to enter into a contract with Nortel,
commence the Development Project as promptly as possible after the
Effective Date of this Agreement, and complete the Development Project
on or prior to June 30, 2001. CO3 agrees to devote sufficient
engineering and administrative resources to the Development Project and
to use commercially reasonable efforts to complete the same by June 30,
2001.
(b) Development Assistance and Support. For purposes of the
Development Project and for customer demonstration purposes, CYBE
agrees to sell to CO3 two (2) SE 300 Products at a price equal to
CYBE's cost of goods sold for such products plus thirty-percent (30%),
which SE 300 Products will be delivered on October 1, 2000 and November
1, 2000, respectively. CYBE will provide reasonable support to CO3 in
connection with the Development Project, including without limitation,
assistance with manufacturing prototypes and beta testing; provided,
however, that CO3 shall compensate CYBE, at reasonable and customary
rates (including expenses), for any such support.
(c) Completion of Development Project. The Photonics Inspection
System will be considered completed upon the acceptance and payment for
one (1) unit of such system by Nortel pursuant to the agreement between
CO3 and Nortel. Success of the Development Project will be measured
solely by the reasonable opinion of Nortel concerning the completed
Photonics Inspection System and Nortel's aforesaid payment.
3.02 CONSIDERATION.
(a) Development Fee. In consideration of CO3 performing the
Development Project, CYBE will pay to CO3 $960,000, or such lesser sum
as is set forth in paragraph (b) of this Article 3.02 (the "Development
Fee"), payable by CYBE to CO3 in monthly installments of $80,000. The
first installment will be paid on the Effective Date, for a pro rata
portion of the month remaining after such date. Thereafter, each
installment will be paid on the first day of each month, until the
entire amount is paid. Such consideration will be paid on the schedule
set forth in this Article 3.02, without regard to the costs incurred by
CO3 in connection with the Development Project and without any need for
CO3 to specifically allocate such amounts to the
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Development Project. Irrespective of the Development Fees paid by CYBE
to CO3, CO3 shall remain fully responsible for successful completion of
the Development Project as set forth and defined in Article 3.01(c).
Other than the Development Fees provided by CYBE, CO3 remains fully
responsible for all other fees, expenses, costs and resources of any
nature whatsoever required to successfully complete the Development
Project.
(b) Abandonment of Development Project. All obligations of CYBE to
pay any portion of the Development Fee will be terminated, and CO3 will
promptly refund fifty percent (50%) of all previous payments of the
Development Fee, in the event that CO3 has, at any time and for any
reason, abandoned the Development Project. As used herein "abandon"
shall be deemed to have occurred if CO3 is not making commercially
reasonable efforts to complete the Development Project, which shall
include, without limitation, an expenditure of at least $5,000 per
month towards the Development Project in every month preceding the
first shipment of a beta unit of the Photonics Inspection System to
Nortel. CYBE may, in its sole discretion, waive the aforesaid $5,000
requirement for any given month; provided, however, that such waiver
shall not be constituted a waiver of such requirement for any other
applicable month. Nothing in this Article 3.02(b) shall relieve CO3 of
the obligation to use all reasonably commercial efforts to complete the
Development Project using its own resources, including using all such
efforts prior to any abandonment of the Development Project.
3.03 DEVELOPMENT LICENSE - GENERALLY. CYBE grants to CO3 a
non-exclusive, fully paid-up, non-transferable license to use internally
(without the right to sublicense) the portion of the CYBE Intellectual Property
reasonably necessary and solely for the purpose of development and further
improvement of the Photonics Inspection Product Line. Such license will include
the right and license to create Derivative Works of the XXX Software. Such
license will be effective from the Effective Date until the termination or
expiration of the Initial Term of the Distribution Agreement to be entered into
pursuant to Article 3.05. Except for the license granted by CYBE to CO3 pursuant
to Article 3.07(d), any Derivative Works of any such CYBE Intellectual Property
shall be the sole and exclusive property of CYBE and all development by CO3 with
respect thereto shall be deemed a "work made for hire.
3.04 DEVELOPMENT LICENSE FOR XXX SOFTWARE.
(a) Development and Support Assistance. CYBE agrees to provide CO3
with up to eight (8) man weeks of technical support time, free of
charge, to support development of the Photonics Inspection System;
provided, however, that CYBE shall have no such obligation after
October 1, 2000 regardless of the amount of time provided by CYBE
before that date; and further provided that CO3 may contract for such
CYBE technical support on an as available per diem basis after that
date.
(b) Source Code. CYBE agrees to deliver to CO3 one copy of the
source code to the XXX Software solely for purposes of developing the
Photonics Inspection System. CO3 acknowledges that such source code is
"Confidential Information" and trade secret information of CYBE
developed by CYBE and its subsidiaries at great expense. Accordingly,
CO3 will not be authorized to make copies of such source code (other
than a limited number of copies necessary for the Development Project)
and will limit access to the source code to those persons working on
the Development Project with a need for such access to complete
development. CO3 agrees to use the same degree of care with respect to
the source code as would be used by CO3 with respect to its own
proprietary source code, and in any event, the same degree of care as
would be used in the industry, including keeping the source code in a
secure area. CO3 will require each of its employees, contractors or
other authorized representatives who have access to the source code to
sign agreements acknowledging their obligations to protect the
proprietary and trade secret nature
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of the source code and keep the source code confidential. CYBE will be
a third party beneficiary of the confidentiality provision of such
employee agreements as it relates to disclosures referenced in this
paragraph.
(c) Ownership. CO3 acknowledges that all development by CO3 with
respect to the Development Project shall be deemed work made for hire,
and, except with respect to the development license contained in
Article 3.03 and the license granted by CYBE to CO3 pursuant to Article
3.07(d), CO3 will not acquire any interest in the XXX Software or
Derivative Works thereof or the CYBE Intellectual Property or
Derivative Works thereof, and that CYBE owns all right, title and
interest in such XXX Software, CYBE Intellectual Property and
Derivative Works thereof, including, without limitation, as a
copyrighted, or copyrightable work, and as CYBE trade secret
information. CO3 also acknowledges that certain techniques embodied in
the XXX Software are inventions of CYBE subject to protection under
CYBE patents.
(d) Support. CYBE agrees to provide CO3, free of charge, with the
services of CYBE software engineers and other technical support
personnel to remedy any software bugs found in the "core" XXX Software;
provided, however, that such bug fixes shall be limited to fixes
required to cause the XXX Software to function in applications for
which it is commercially marketed as part of the CYBE KS100 system by
CYBE on the same terms as CYBE would provide such fixes to its
commercial customers.
3.05 DISTRIBUTION OF PHOTONICS INSPECTION LINE.
(a) Exclusive Distribution Rights for the Photonics Inspection
Line. Upon the completion of the Development Project, CYBE agrees that
it will grant to CO3 certain exclusive distribution rights to the
Photonics Inspection Line pursuant to a distribution agreement in the
form of Exhibit D to this Agreement (the "Distribution Agreement"). The
"Initial Term" of the Distribution Agreement will be from the Effective
Date and continuing for two-years from the date of CO3's first sale of
a Photonics Inspection System or three (3) years from the Effective
Date, whichever occurs first. At the end of the Initial Term, the
Distribution Agreement may be extended, at CYBE's sole discretion, for
an additional two (2) years thereafter. CYBE agrees that during the
Initial Term of the Distribution Agreement, that: (1) CO3 distribution
rights shall be exclusive (including with respect to CYBE or any other
distributor or representative for or on behalf of CYBE) with respect to
the marketing, sale, licensing and distribution of stand-alone
Photonics Inspection Line products to fiber optics telecommunications
component manufacturers worldwide (the "Exclusive Market"); and (2)
CYBE will not market, sell or license any product that is competitive
with the Photonics Inspection Line into the Exclusive Market. In the
event that CYBE extends the term of the Distribution Agreement beyond
the Initial Term for an additional two (2) years, CYBE will consider,
at its sole option, extending the exclusive distribution rights
described herein if CO3 has sold, during the Initial Term, at least $4
million (U.S. dollars) in Photonics Inspection Line products. Other
than the payment of the product transfer price pursuant to the
Distribution Agreement, CYBE will not receive any royalty or other
payment from CO3 in connection with the marketing the Photonics
Inspection Line. CYBE agrees that it will, for the term of the
Distribution Agreement, manufacture and supply Photonics Inspection
Systems to CO3 in the quantities ordered by CO3.
3.06 Sale Price. CYBE's sale price to CO3 for each product in the
Photonics Inspection Line pursuant to the Distribution Agreement shall be such
as to provide CYBE with 200% of CYBE's cost of goods sold related to such
products, calculated in accordance with generally accepted accounting principles
as used by CYBE in its normal financial reporting.
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3.07 INTELLECTUAL PROPERTY RIGHTS AND OBLIGATIONS
(a) Deliverables. Upon completion of the Development Project, or
upon abandonment pursuant to Article 3.02(b), CO3 shall immediately
deliver to CYBE one copy of all Know-How compiled or available in
connection with the Development Project and necessary for CYBE to
develop, manufacture, service, market and distribute the Photonics
Inspection System and Photonics Inspection Product Line. If requested
by CYBE, CO3 agrees to provide a reasonable amount of consulting, at no
additional charge, to CYBE or other parties as CYBE may designate, to
assist with utilizing the Know-How in the manufacture and servicing of
the Photonics Inspection System and Photonics Inspection Product Line
products. Except for the license granted by CYBE to CO3 pursuant to
Article 3.07(d), all Know-How produced by or as a result of the work
performed by CO3 for CYBE hereunder, including all copies thereof,
shall be the sole and exclusive property of CYBE, it being intended
that all such Know-How be deemed "works made for hire" of which CYBE
shall be deemed the author and owner thereof, and CO3 hereby grants,
assigns, transfers and sets over to CYBE the entire right, title and
interest in and to such Know-How, except for the license granted by
CYBE to CO3 pursuant to Article 3.07(d).
(b) Ownership of Photonics Inspection System and Photonics
Inspection Product Line. CO3 hereby grants, assigns, transfers and sets
over to CYBE the entire right, title and interest in and to the
Photonics Inspection System, Photonics Inspection Product Line, and any
Derivative Works thereof, including, without limitation, any and all
Development Inspection System Technology Rights therein or related
thereto, or created in the development thereof. The terms set forth in
this Article 3.07(b) shall apply in the case of Development Project
abandonment as described in Article 3.02(b), to the extent such
Photonics Inspection System, Photonics Inspection Product Line and
Derivative Works are completed.
(c) Assistance. CO3 agrees that it will promptly disclose to CYBE
any Inventions, Know-How or other intellectual property developed
hereunder, and agrees to execute any documents or provide any
assistance reasonably requested by CYBE in connection with obtaining
copyrights, patents or other intellectual property rights covered by
any of the foregoing. Additionally, CO3 agrees to use reasonable,
commercial efforts to specifically identify all CYBE Intellectual
Property used in Development Project and any resulting Photonics
Inspection System, Photonics Inspection Product Line and Derivative
Works thereof.
(d) License to CO3. CYBE hereby grants to CO3 a worldwide,
Conditionally Irrevocable, non-transferable, fully paid-up license
under the Developed Inspection System Technology Rights to make, have
made, make Derivative Works, use, offer for sale, sell and otherwise
deal in products and services solely in, but exclusive to CO3 in, the
Photonics Assembly Market, which products and services would otherwise
infringe the Developed Inspection System Technology Rights, CYBE
Intellectual Property Rights or other rights of CYBE in the absence of
the license of this paragraph. Except for the limited exclusive rights
to the Developed Inspection System Technology Rights granted by CYBE to
CO3 in this Article 3.07(d), CYBE reserves onto itself all unrestricted
rights in and to the Developed Inspection System Technology Rights and
Derivative Works thereof.
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ARTICLE IV.
PHOTONICS ASSEMBLY MARKET
4.01 LICENSE OF CYBE ASSEMBLY TECHNOLOGY RIGHTS.
(a) License. CYBE hereby grants to CO3 a worldwide, exclusive,
Conditionally Irrevocable, non-transferable, fully paid-up license
under the CYBE Assembly Intellectual Property solely to make, have
made, make Derivative Works, use, offer for sale, sell and otherwise
deal in Photonics Assembly Products and related services, which
products or services would otherwise infringe the CYBE Assembly
Intellectual Property in the absence of the license of this Article
4.01(a). Such license herein shall include the right to distribute and
sublicense others to distribute the CYBE Assembly Intellectual Property
only as included with the Photonics Assembly Products, and provided
that any ultimate end user customer is licensed to use such CYBE
Assembly Intellectual Property with the Photonics Assembly Products for
internal use only. Except for the limited exclusive rights to the CYBE
Assembly Intellectual Property granted by CYBE to CO3 in this Article
4.01(a), CYBE reserves onto itself all unrestricted rights in and to
the CYBE Assembly Intellectual Property.
(b) Documentation. CYBE will provide CO3 with copies of the
Know-How related to the CYBE Assembly Intellectual Property, to the
extent such is available and reasonably necessary for CO3 to accomplish
the purposes of the license granted in Article 4.01(a) above.
(c) Distribution and Sale License of XXX Software. CYBE grants to
CO3 a worldwide, non-exclusive, Conditionally Irrevocable,
nontransferable license: (i) to use and install (in object code form
only) the XXX Software, solely in combination with other software and
hardware components having substantial independent value, in the
Photonics Assembly Products produced by CO3: (ii) to make copies of the
XXX Software in object code solely for incorporation into the aforesaid
Photonics Assembly Products produced by CO3; (iii) to distribute and
sublicense others to distribute the XXX Software (in object code form
only) solely as part of Photonics Assembly Products produced by CO3;
and (iv) to license end user customers to use the XXX Software (in
object code form only) solely for their internal use as part of
Photonics Assembly Products produced by CO3. CO3 will pay a license and
royalty fee to CYBE equal to $5,000 for each copy of the XXX Software,
or any Derivative Work of the XXX Software, incorporated into such
Photonics Assembly Products. Such fee will be due and owing upon
shipment of any Photonics Assembly Product that incorporates any
portion of the XXX Software, with a credit to be given for subsequent
returns of any such Photonics Assembly Product.
(d) Ownership. CO3 acknowledges that, except with respect to the
licenses contained in Article 4.01(a) and (c), CO3 will not acquire any
interest in the CYBE Assembly Intellectual Property, XXX Software or
any other CYBE Intellectual Property, and that CYBE owns all right,
title and interest therein including, without limitation, as
copyrighted or copyrightable work, patents, and/or CYBE trade secret
information. CO3 also acknowledges that certain techniques embodied in
the XXX Software are inventions of CYBE subject to protection under
CYBE patents. CO3 will hold title to any Derivative Works of the CYBE
Assembly Intellectual Property solely in the Photonics Assembly
Products, including certain inventive techniques and trade secrets that
may be embedded in the Derivative Works thereof, subject to the royalty
and license fees set forth in Article 4.01(c).
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(e) Unintended Use of Other CYBE Intellectual Property. CYBE
acknowledges that the Former CYBE Employees have had access to CYBE
Intellectual Property, including trade secrets and patented or
patentable technology, that is not part of the CYBE Assembly
Intellectual Property and not otherwise licensed pursuant to this
Agreement (the "Unlicensed CYBE IP"). Provided that CO3 has used its
best efforts to avoid the use of the Unlicensed CYBE IP and has
promptly notified CYBE of the inadvertent use of such Unlicensed CYBE
IP in CO3 Photonics Assembly Products, and provided that, in CYBE's
reasonable judgment, the license to CO3 of such Unlicensed CYBE IP
would not impair its competitive position in the Inspection Equipment
Market, CYBE agrees to negotiate in good faith with CO3 for the license
of such Unlicensed CYBE IP to CO3 for use solely in the CO3 Photonics
Assembly Products in which the same was inadvertently incorporated, on
terms, including license fees, royalties or other payments, consistent
with the terms on which similar rights are licensed by CYBE to third
parties in the market.
4.02 CROSS LICENSE AND ASSISTANCE.
(a) Cross-License. CO3 grants to CYBE a worldwide, non-exclusive,
royalty free, fully paid-up, Conditionally Irrevocable, nontransferable
license solely: (i) to use and install the CO3 Intellectual Property or
any Derivative Work thereof, in the design or development of any
Inspection Equipment Market related products or services, or use such
in combination with other software and hardware components having
substantial independent value, in the products or services CYBE
designs, develops, markets, sells and/or licenses into the Inspection
Equipment Market; (ii) to make copies of any CO3 software in object
code form solely for incorporation into the aforesaid Inspection
Equipment Market products or services; (iii) to distribute and
sublicense others to distribute the CO3 Intellectual Property and
software (in object code form only) as part of CYBE's Inspection
Equipment Market products or services; and (iv) to license end user
customers to use the CO3 Intellectual Property or software (in object
code form only) solely for their internal use as part of the CYBE
Inspection Equipment Market products or services. Notwithstanding the
foregoing, the license herein shall relate to the CO3 Intellectual
Property as it exists between the Effective Date and the fifth
anniversary of the Agreement. Without limiting the foregoing in any
way, such license and rights granted to CYBE in this Article 4.02(a)
shall include the license and right to that portion of CO3 Intellectual
Property which forms any part of optical component attachment methods
within optical devices solely for the Inspection Equipment Market.
Except for the limited exclusive rights to the CO3 Intellectual
Property and Derivative Works thereof granted by CO3 to CYBE in this
Article 4.02(a), CO3 reserves onto itself all unrestricted rights in
and to the CO3 Intellectual Property.
(b) Documentation. CO3 will provide copies of the Know-How
necessary for CYBE to develop, manufacture, market and distribute
Inspection Market Equipment products and services under the license
granted in Article 4.02(a) above.
4.03 FORMER CYBE EMPLOYEES.
(a) CYBE agrees to terminate, without the payment by the employee
of any amount or the incurrence by the employee of any other penalty,
any agreements between it and any of the Former CYBE Employees ("Former
CYBE Employee Agreements"). Any provisions in the Former CYBE Employee
Agreements related to protection of CYBE confidential information, or
ownership, assignment and/or protection of CYBE intellectual property
shall survive, pursuant to the terms of such agreements ("Survival
Provisions"); provided, however, that:
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1) notwithstanding any such Survival Provisions related to the
protection of CYBE confidential information or any applicable
law, the disclosure by any Former CYBE Employee to any
director, officer, employee of CO3, or to any agent or
representative of CO3, that has a confidentiality obligation
to CO3, of any CYBE confidential information will not be
deemed to be in violation of such Survival Provisions or
applicable law;
2) notwithstanding any such Survival Provisions related to the
ownership, assignment and/or protection of CYBE Intellectual
Property or any applicable law, CYBE specifically waives and
releases any rights it may have under such agreements or such
applicable law to any intellectual property developed by such
Former CYBE Employees after February 1, 2000 for Photonics
Assembly Products, except with respect to any intellectual
property related to the Development Project or in any products
developed thereunder; and
3) notwithstanding any such Survival Provisions restricting
the Former CYBE Employees from working for CYBE competitors,
the Former CYBE Employees will be permitted to be employed by
CO3.
(b) Notwithstanding the foregoing, CO3 and the Former CYBE
Employees recognize and agree that they will lose and forego all rights
in and to any stock options in CYBE that are unvested as of the
Separation Date set forth in Schedule II, and that all such Former CYBE
Employees shall remain fully responsible for any and all loans that
they may have with CYBE (401K, computer or otherwise). Each of the
Former CYBE Employees will sign an agreement in the form attached
hereto as Exhibit E that provides they will keep confidential certain
CYBE confidential information they become aware of in the future from
time to time. All Former CYBE Employees will provide assistance to
CYBE, at CYBE's expense, for filing, obtaining, perfecting, assigning
or other disposition of any CYBE owned intellectual property, pursuant
to the terms of the Survival Provisions.
4.04 NON-COMPETE COVENANT. For a five-year period beginning on the
Effective Date: (a) CO3 will not make, have made, make Derivative Works, use,
offer for sale, sell or otherwise deal in products, software or services for use
in the Inspection Equipment Market, or license, contract or arrange with any
Third Party to do any of the foregoing, except that CO3 shall have distribution
rights as set forth in Article 3.05; and (b) CYBE will not make, have made, make
Derivative Works, use, offer for sale, sell or otherwise deal in products,
software or services in the Photonics Assembly Market, or license, contract or
arrange with any Third Party to do any of the foregoing, excluding only the
Photonics Inspection Product Line.
4.05 CYBE RIGHT OF FIRST REFUSAL. For period of five (5) years from the
Effective Date, CO3 agrees to provide CYBE with the right of first refusal with
respect to supplying CO3's needs for any custom laser or optical sensor for
CO3's products, provided CYBE can reasonably meet such needs. CO3 agrees that
before it seeks other sources of supply for such custom lasers or optical
sensors from any Third Party, CO3 will first, for a 45-day period, negotiate in
good faith exclusively with CYBE for an agreement providing for the supply of
such custom lasers or optical sensors. If CYBE and CO3 fail to either reach
mutual agreement on the terms and conditions of a definitive agreement for the
supply of such custom lasers or optical sensors, or make a reasonable amount of
progress towards such agreement, then CO3 shall be free to pursue and enter into
a supply arrangement with a Third Party for such custom lasers or optical
sensors.
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ARTICLE V.
OTHER INTELLECTUAL PROPERTY MATTERS
5.01 TRADEMARK LICENSE.
(a) Grant. CYBE grants to CO3 a worldwide, non-exclusive, fully
paid-up, non-transferable license to use the trademark "CyberOptics" in
connection with its business, and as part of CO3's name, such license
subject to the audit provisions set forth in this Article, and such
license to terminate upon the earlier of:
1) The date of a Change of Control of CO3; or
2) The date CO3 is subject to the reporting requirements
contained in Article 15(d) or 13(a) of the Securities Exchange
Act of 1934, as amended; or
3) Five (5) years from the Effective Date.
The earlier of such dates above shall be referred to in this Agreement
as a "CO3 Transition Event". Notwithstanding the termination provisions
stated above, the license granted under the provisions of this Article
will terminate upon: (1) notice by CO3 to CYBE that CO3 does not wish
to use such xxxx; or (2) CO3 having discontinued use of such xxxx for a
period of one (1) year.
(b) Protection of Good Will in Xxxx. CO3 agrees that the products
or services of CO3 sold or promoted with the CYBE Trademark will
comport with their respective operating specifications; that such
products and services will be manufactured, sold, and distributed in
accordance with all applicable laws of U.S. and of the jurisdiction in
which they are sold or promoted; and that the sale of such products or
services will in no manner reflect adversely upon the goodwill built-up
in the CYBE Trademark nor on CYBE. Notwithstanding the foregoing, CO3
shall not use the trade dress, logos or designs for the CYBE Trademark,
which have been or are used by CYBE.
(c) Inspection. CO3 agrees that CYBE will have a right to inspect
the CO3 products and services at reasonable times and on reasonable
notice and to terminate the license granted in this Article if such
products do not comply with the provisions of this Article and CO3 has
failed to cure such non-compliance after ninety (90) days written
notice.
(d) Ownership. CO3 agrees that the CYBE Trademark and all goodwill
pertaining thereto belong to CYBE, and to the extent that the CYBE
Trademark has acquired secondary meaning in the mind of the public,
such right will belong exclusively to CYBE, and that the use of the
CYBE Trademark under this Agreement inures solely to CYBE's benefit.
(e) Attribution. If CO3 marks its products with the CYBE
Trademark, CO3 agrees to xxxx the same in the U.S. with the designator
"(R)" and, unless otherwise agreed to by CYBE in writing, to attribute
CYBE's ownership of the CYBE Trademark with a statement of attribution
(including a statement that CO3 is not an affiliate of CYBE).
(f) Enforcement. CYBE will determine whether to take any action in
the courts, administrative agencies or otherwise to prevent the
infringement, imitation, simulation or other
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illegal use or misuse of the CYBE Trademark; provided that if CYBE
elects not to take such action with respect to the CYBE Trademark, CO3
will have the right to take such action at its own expense if it gives
CYBE adequate prior written notice of its intention to take such action
and CYBE does not reasonably object thereto. In any such event, the
parties will cooperate with respect to any such action. Any damages
recovered in any such action will first be applied to reimburse any
party hereto for expenses incurred with respect to such action, and
then will be allocated between the parties in proportion to the damages
with respect to which the recovery was made. Otherwise, the parties
hereto will bear their own expenses incurred with respect to such
action.
5.02 CONFIDENTIAL INFORMATION.
(a) Nondisclosure. Both parties agree not to disclose Confidential
Information of the other party, or to use such Confidential Information
for any use, other than such use which is explicitly licensed herein.
Each party agrees to limit distribution of Confidential Information of
the other to its own employees and contractors who are: (1) under an
obligation of confidentiality to such party; and (2) which have a need
to know. For seven (7) years from the date of disclosure of any
Confidential Information, both parties agree to treat as confidential
and not to disclose or disseminate to any third party, or copy or use,
in whole or in part, any such Confidential Information of the other
party in any manner, except with the owner's written permission.
Nothing herein will restrict the right of either party to disclose such
Confidential Information that is disclosed pursuant to a judicial
order, but only to the event so ordered, and provided that the parties
will notify each other in writing of such order in sufficient time as
to permit the owner of the Confidential Information to intervene in
response to such order. Nothing herein will restrict the right of a
party to disclose the terms of this Agreement as required by applicable
law or regulation.
(b) Confidentiality Agreements. Both parties represent and warrant
that they have written agreements in place with their employees and
contractors to so protect their own proprietary information and the
proprietary information of others that they are obligated to protect,
and that each employee and contractor who may have access to the
Confidential Information will be advised of and subject to the
obligations of this Agreement.
(c) Ownership of Confidential Information. All Confidential
Information and copies thereof will remain the property of the party
originally disclosing such information. Confidential Information and
all copies thereof will be returned to the disclosing party upon
written request of the disclosing party (unless such request would be
in conflict with the other terms and intent of this Agreement) or, if
no such request is made, upon the completion of the purpose for which
the Confidential Information was submitted by one party to the other.
5.03 NO WARRANTY--AS IS. CO3 agrees that CYBE licenses to CO3 the CYBE
Intellectual Property, CYBE Assembly Intellectual Property, XXX Software and
CYBE Trademark, and conveys the title to the Equipment, "AS IS", and CYBE agrees
that CO3 licenses to CYBE the CO3 Intellectual Property under Article 4.02(a)
and transfers to CYBE the Developed Inspection System Technology Rights "AS IS".
With respect to any conveyances, licenses or the like granted or provided by one
party to the other hereunder, THERE ARE NO REPRESENTATIONS OR WARRANTIES OF ANY
KIND, EXPRESS OR IMPLIED, AS TO MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE,
NON-INFRINGEMENT OR ANY OTHER MATTER WITH RESPECT TO ANY INTELECTUAL PROPERTY
LICENSED HEREIN OR ANY OTHER GOODS OR SERVICES.
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ARTICLE VI.
FACILITIES AND SERVICES AGREEMENT
6.01 TEMPORARY USE OF FACILITIES. CYBE agrees to make available to CO3
the use of a limited amount of office and research space at its principle
offices at 0000 Xxxxxx Xxxxx Xxxxx, Xxxxxx Xxxxxx, Xxxxxxxxx 00000 pursuant to a
Facilities and Services Agreement in the form of the attached Exhibit F (the
"Facilities Agreement") for the limited period of time as set forth therein.
ARTICLE VII.
COVENANTS OF CO3
CO3 covenants and agrees with CYBE that until the earlier of: (a) a CO3
Transition Event (as defined in Article 5.01(a); or (b) the date on which CYBE
owns less than ten-percent (10%) of the outstanding voting stock of CO3:
7.01 CORPORATE EXISTENCE. CO3 will maintain its corporate existence in
good standing and comply with all applicable laws and regulations of the United
States or of any state or political subdivision thereof and of any government
authority where failure to so comply would have a material adverse impact on CO3
or its business or operations.
7.02 BOOKS OF ACCOUNT AND RESERVES. CO3 will keep books of record and
account in which full, true and correct entries are made of all of its dealings,
business and affairs, in accordance with generally accepted accounting
principles. CO3 will employ certified public accountants selected by the Board
of Directors of CO3 and approved by CYBE who are "independent" within the
meaning of the accounting regulations of the Securities and Exchange Commission
and are one of the "Big Five" accounting firms. CO3 will have annual audits made
by such independent public accountants in the course of which such accountants
shall make such examinations, in accordance with generally accepted auditing
standards, as will enable them to give such reports or opinions with respect to
the financial statements of CO3 as will satisfy the requirements of the
Commission in effect at such time with respect to reports or opinions of
accountants (except with regard to the Commission's requirements for accounting
for preferred shares as debt rather than equity).
7.03 FURNISHING OF FINANCIAL STATEMENTS AND INFORMATION. During any
period during which the operations of CO3 must be consolidated with the
operations of CYBE for financial reporting purposes, CO3 will cooperate with
CYBE and provide to CYBE such financial information as CYBE requires to promptly
complete its financial statements and publish releases of its earnings and file
reports with the Securities and Exchange Commission within time frames
consistent with the time frames during which CYBE has historically completed and
filed such reports. For so long as CYBE owns not less than ten-percent (10%) of
the outstanding capital stock of CO3, CO3 will deliver to CYBE:
(a) as soon as available, but in any event within 30 days after
the close of each quarter, an unaudited balance sheet of CO3 as of the
end of such quarter, together with the related statements of
consolidated operations for each such quarter;
(b) as soon as available, but in any event within 90 days after
the end of each fiscal year, a balance sheet of CO3, as of the end of
such fiscal year, together with the related statements of operations,
retained earnings and changes in financial position for such fiscal
year, all in reasonable detail and duly certified by CO3's independent
public accountants, which accountants shall have given CO3 an opinion,
unqualified as to the scope of the audit, regarding such statements;
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(c) within 15 days after CO3 learns of the commencement or written
threats of the commencement of any material suit, legal or equitable,
or of any material administrative, arbitration or other proceeding
against CO3 or its business, assets or properties, written notice of
the nature and extent of such suit or proceeding;
(d) promptly after the submission thereof to CO3, copies of all
reports and recommendations submitted by independent public accountants
in connection with any annual or interim audit of the accounts of CO3
made by such accountants;
(e) with reasonable promptness, such other financial data relating
to the business, affairs and financial condition of CO3 as is available
to CO3 and as from time to time the CYBE may reasonably request.
7.04 INSPECTION. CO3 will permit CYBE or any representatives designated
by it and reasonably satisfactory to CO3 to inspect any of the properties CO3,
including its books and records (and to make photocopies thereof or make
extracts therefrom), and to discuss its affairs, finances and accounts with its
officers, lawyers and accountants, except with respect to engineering data and
other technical information that is not public knowledge, all to such reasonable
extent and at such reasonable times and intervals as such Investor may
reasonably request. All such information shall be treated as CO3 Confidential
Information.
7.05 REPRESENTATION ON BOARD OF DIRECTORS; DIRECTORS' AND SHAREHOLDERS'
MEETINGS. From and after the date hereof, (i) one (1) of CO3's directors shall
at all times be a person designated by CYBE, (ii) in the event of the death,
resignation or removal of any such director so designated by CYBE, CYBE shall be
entitled to designate such director's successor, and (iii) CO3 agrees that in
submitting to CO3's shareholders or Board of Directors the names and nominees
for election as directors or in filling interim vacancies, it will use its best
efforts to cause any person designated pursuant to clauses (i) or (ii) above to
be elected as a director. CO3 understands that, as of the date of this
Agreement, the director designated by CYBE shall be Xxxxxx X. Case but that, at
the request of CYBE, CO3 shall take all action as CYBE shall reasonably request
to appoint a replacement representative for CYBE to CO3's board of directors who
is not an officer, employee or investor in CO3. CO3 agrees, as a general
practice, to hold meetings of its Board of Directors at least once every
calendar quarter.
7.06 ISSUANCE OF STOCK AND RIGHTS TO ACQUIRE STOCK. CYBE or its
assignees shall have a right of first refusal to purchase its pro rata portion
of any securities of CO3 of any class or kind which CO3 proposes to sell for
cash in a nonregistered private placement. If CO3 wishes to make any such sale
of its securities, it shall give CYBE written notice of the proposed sale. The
notice shall set forth the material terms and conditions of the proposed sale
and shall constitute an offer to sell such securities to CYBE and/or its assigns
on such terms and conditions. CYBE may accept such offer by delivering a written
notice of acceptance to CO3 within twenty (20) days after receipt of CO3's
notice of the proposed sale. By exercising such right of first refusal CYBE
shall be entitled to participate in the purchase of such securities on a pro
rata basis for the purpose of maintaining CYBE's proportionate beneficial
ownership interest in CO3. If CYBE (or its assignees) elects to exercise such
right of first refusal and does not complete the purchase of such securities
within thirty (30) days after delivery of its written notice of acceptance to
CO3, or such later date as may be specified by CO3, CO3 may complete the sale of
such securities on the terms and conditions specified in CO3's notice to persons
other than CYBE and its assignees.
The above right of first refusal will not apply to any additional
shares of capital stock (a) issued to employees or management of CO3, or
issuable upon exercise of stock options granted to such employees and
management, pursuant to stock-based compensation plans, all as approved by the
Board of Directors
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of CO3, (b) issued or issuable by way of stock split or stock dividend or
similar capital modification, (c) issued in connection with any merger,
acquisition or other reorganization, or (d) issued upon authorization of the
Board of Directors in connection with business conducted by CO3 in bona fide
financing transactions with lessors or financial institutions. For purposes of
such right of first refusal, the issuance by CO3 of any warrant or right to
purchase or subscribe to another security, or the issuance of a security which
gives the holder a present or future right or privilege to convert the security
into another security, will be deemed to include the issuance of the underlying
security at the time of the issuance of the warrant or right or convertible
security, but the exercise of the right to purchase or subscribe or to convert
will not be deemed an additional "issuance" subject to such right of first
refusal.
7.07 HIRING OF EMPLOYEES. CO3 agrees that, for a period of five (5)
years after the Effective Date, neither CO3 nor any corporation or other entity
or business with which CO3 is in any way Affiliated (except to the extent such
Affiliation is through CYBE), will, without the prior written consent of the
Chief Executive Officer of CYBE: (i) employ or solicit for employment, or
contract for services with or solicit to contract for services with, any person
who as of the date of this Agreement is, or after such date is or was within the
preceding one-year period, an employee of CYBE or any Affiliate of CYBE
(including, without limitation, the employment or contracting of such CYBE
employees for work after normal business hours); or (ii) induce or attempt to
induce, directly or indirectly, any customer, supplier, distributor, licensee or
other business relation of CYBE or any Affiliate of CYBE to cease doing business
with the CYBE or such Affiliate, or in any way interfere with the relationship
between any such customer, supplier, distributor, licensee or business relation
and CYBE or any such Affiliate. CO3 agrees that it will advise any employee, or
any former employee, of CYBE who solicits employment from CO3 of the
restrictions set forth in this Article 7.07.
7.08 INSURANCE.
(a) Key Person Insurance. CO3 will at all times maintain term life
insurance policies which will pay benefits of at least $2 million to
CO3 upon the death of Xxxxxx X. Case. In such event, CO3 will offer in
writing to redeem common stock from CYBE at a redemption price equal to
fair market value of the Common Stock, but in any event not less that
the purchase price therefor. If the aggregate redemption price for the
Shares which are tendered for redemption exceeds the available
insurance proceeds, CO3 will redeem as many such Shares as $2 million
will redeem.
(b) Other Insurance. CO3 will obtain and maintain in force such
property damage, public liability, business interruption, worker's
compensation, indemnity bonds and other types of insurance as CO3's
executive officers, after consultation with an accredited insurance
broker, shall determine to be necessary and appropriate to protect CO3
from the insurable hazards or risks associated with the conduct of
CO3's business. CO3's executive officers shall periodically report to
the Board of Directors on the status of such insurance coverage. All
such insurance policies shall be maintained in at least such amounts
and to such extent as shall be determined to be reasonable by the Board
of Directors. All such insurance shall be effected and maintained in
force under a policy or policies issued by insurers of recognized
responsibility, except that CO3 or any subsidiary may effect worker's
compensation or similar insurance in respect of operations in any state
or other jurisdiction either through an insurance fund operated by such
state or other jurisdiction or by causing to be maintained a system or
systems of self-insurance which is in accord with applicable laws.
7.09 FUTURE REGISTRATION RIGHTS. Except for any registration expressly
permitted by article VIII of this Agreement, and except for an underwriting
agreement between CO3 and one or more professional underwriters of securities,
CO3 will not agree with the holders of any securities issued or to
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be issued by CO3 to register such securities under the Securities Act nor will
it grant any incidental registration rights, unless such agreement specifically
provides that (i) the holder of such securities may not participate in any
registration requested pursuant to Article 8.01 without the consent of CYBE
included in such registration, (ii) unless in the opinion of the managing
underwriter or underwriters, if any, of any registration in which Purchased
Shares are included pursuant to either Article 8.01 or Article 8.02, the public
offering or sale of such other securities would not interfere with the
successful public offering and sale of such shares, such other securities will
not be included in a registration statement in which such Shares are so
included, (iii) such subsequent purchasers will not be granted registration
rights more favorable than those granted to the CYBE, and (iv) such securities
may not be publicly offered or sold for a period of at least ninety (90) days
after the closing of any public offering of Shares registered pursuant to
article VIII.
7.10. STOCKHOLDER AGREEMENT. CO3 shall cause each of its current
shareholders who own, or who will own after the initial issuance of 20,000,000
shares of its common stock, five percent or more of CO3's common stock, to sign
the stockholders agreement attached hereto as Exhibit G.
ARTICLE VIII.
REGISTRATION RIGHTS
8.01 REQUIRED REGISTRATION. If, at any time after CO3 is subject to the
reporting requirements of Article 13 or 15(d) of the Securities Exchange Act of
1934, but not within the first 180 days after the initial public offering of
CO3's common stock, CO3 receives a written request therefor from CYBE, CO3 will,
except as provided in the last paragraph of this Article, prepare and file a
registration statement under the Securities Act covering the Shares which are
the subject of such request and will use its best efforts to cause such
registration statement to become effective. CO3 will be obligated to prepare,
file and cause to become effective only one (1) registration statement pursuant
to this Article 8.01; notwithstanding the foregoing, CYBE may require, pursuant
to this Article 8.01, CO3 to file any number of registration statements on Form
S-3 (or any successor form subsequently promulgated by the Commission as a
replacement for Form S-3) if such form is then available for use by CO3 and such
record holder or holders, not to exceed more than one such filing in any
six-month period.
Without the written consent of CYBE, neither CO3 nor any other holder
of securities of CO3 may include securities in such registration if in the good
faith judgment of the managing underwriter of such public offering the inclusion
of such securities would interfere with the successful marketing of the Shares
or require the exclusion of any portion of the Shares to be registered.
Notwithstanding the foregoing, CO3 will not be obligated to effect a
registration statement pursuant to this Article 8.01 (and upon the occurrence of
the event set forth below may withdraw or abandon any such registration): (a) if
CO3 will furnish to the holders of the Shares a certificate signed by the
President of CO3 stating that in the good faith judgment of CO3's Board of
Directors, (i) the offering would interfere in any material respect with any
financing, acquisition, corporate reorganization or some other material
transaction under consideration by CO3 or (ii) there is some other material
development relating to the condition (financial or other) of CO3 that has not
been disclosed to the general public and as to which it is in CO3's best
interests not to disclose such development; provided that the aggregate period
of delay under this paragraph may not extend, in any twelve-month period, for
more than 120 days unless CYBE consents in writing to a longer delay; or (b)
from and after the date on which CO3 has filed a registration statement relating
to an underwritten public offering that has resulted in CYBE being given the
opportunity to include the Shares in such registration statement pursuant to
Article 8.02 below, through and until such period of time as reasonably required
by the managing underwriter for such underwritten offering (not to exceed 180
days after the effective date of such registration statement).
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8.02 INCIDENTAL REGISTRATION. Each time CO3 determines to proceed with
the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for money of any
of its securities by it or any of its security holders (but excluding
registration statements relating to employee benefit plans or mergers or other
transactions under Rule 145 of the Securities Act), CO3 will give written notice
of its determination to CYBE. Upon the written request of CYBE given within 30
days after receipt of any such notice from CO3, CO3 will, except as herein
provided, cause all Shares for which CYBE requests registration to be included
in such registration statement, all to the extent requisite to permit the sale
or other disposition by the prospective seller or sellers of the Shares to be so
registered; provided, however, that (a) nothing herein will prevent CO3 from, at
any time, abandoning or delaying any such registration initiated by it, and (b)
if CO3 determines not to proceed with a registration (other than the
registration relating to an initial public offering) after the registration
statement has been filed with the Commission and CO3's decision not to proceed
is primarily based upon the anticipated public offering price of the securities
to be sold by CO3, CO3 will, if so requested by CYBE, promptly complete the
registration for the benefit of CYBE and CYBE will bear all expenses in excess
of $25,000 incurred by CO3 as the result of such registration after CO3 has
decided not to proceed. If any registration pursuant to this Article shall be
underwritten in whole or in part, CO3 may require that the Shares requested for
inclusion pursuant to this Article be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. In the event that in the good faith judgment of the managing
underwriter of such public offering the inclusion of all of the Shares
originally covered by a request for registration would reduce the number of
shares to be offered by CO3 or interfere with the successful marketing of the
shares of stock offered by CO3, the number of Shares otherwise to be included in
the underwritten public offering may be reduced or eliminated entirely;
provided, however, that after any such required reduction in any offering except
CO3's initial public offering, the Shares to be included in such offering shall
constitute at least twenty-five percent (25%) of the total number of shares to
be included in such offering.
8.03 REGISTRATION PROCEDURES. If and whenever CO3 is required by the
provisions of Articles 8.01 or 8.02 to effect the registration of any Shares
under the Securities Act, CO3 will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period
as may be reasonably necessary to effect the sale of such securities,
not to exceed three (3) months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed three (3) months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as
such security holders and underwriters may reasonably request in order
to facilitate the public offering of such securities;
(d) use its commercially reasonable efforts to register or qualify
the issuance of the securities covered by such registration statement
under such state securities or blue sky laws of such jurisdictions as
such participating holders may reasonably request within 20 days
following the original filing of such registration statement, except
that CO3 will not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
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(e) notify the security holders participating in such
registration, promptly after it receives notice thereof, of the time
when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has
been filed;
(f) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the
request of CYBE, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for CYBE (and
concurred in by counsel for CO3), is required under the Securities Act
or the rules and regulations thereunder in connection with the
distribution of the Shares by CYBE;
(h) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the
Securities Act, any event has occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
(i) advise CYBE, promptly after it receives notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which CYBE has reasonably objected on the
grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or the
rules and regulations thereunder, after having been furnished with a
copy thereof at least five business days prior to the filing thereof,
unless in the opinion of counsel for CO3 the filing of such amendment
or supplement is reasonably necessary to protect CO3 from any
liabilities under any applicable federal or state law and such filing
will not violate applicable law; and
(k) at the request of CYBE, furnish on the effective date of the
registration statement and, if such registration includes an
underwritten public offering, at the closing provided for in the
underwriting agreement: (i) opinions, dated such respective dates, of
the counsel representing CO3 for the purposes of such registration,
addressed to the underwriters, if any, covering such matters as such
underwriters may reasonably request.
8.04 EXPENSES. With respect to any registration, including
registrations pursuant to Form S-3, requested pursuant to Article 8.01 (except
as otherwise provided in such Article with respect to registrations voluntarily
terminated at the request of the requesting security holders and except with
respect to any underwriter's expense on any registration using Form S-3 that is
underwritten) and with respect to each inclusion of Shares in a registration
statement pursuant to Article 8.02 (except as otherwise provided in Article 8.02
with respect to registrations terminated by XX0), XX0 will bear the following
fees, costs and expenses: all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for CO3, fees and
disbursements of counsel for the underwriter or underwriters of such securities
(if CO3 and/or selling security holders are required to bear such fees and
disbursements), all internal expenses of CO3, the premiums and other costs of
policies of insurance
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against liability arising out of the public offering, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of any jurisdictions in which the securities to be offered are to be
registered or qualified. Fees and disbursements of counsel and accountants for
the selling security holders, underwriting discounts and commissions and
transfer taxes for selling security holders and any other expenses incurred by
the selling security holders not expressly included above will be borne by the
selling security holders.
8.05 INDEMNIFICATION. In the event that any Shares are included in a
registration statement under Articles 8.01 or 8.02:
(a) CO3 will indemnify and hold harmless each holder of Shares
which are included in a registration statement pursuant to the
provisions of this Article VIII and any underwriter (as defined in the
Securities Act) for such holder and each person, if any, who controls
such holder or such underwriter within the meaning of the Securities
Act, from and against any and all loss, damage, liability, cost and
expense to which such holder or any such underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that CO3 will not be liable in
any such case to the extent that any such loss, damage, liability, cost
or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in
conformity with information furnished by such holder, such underwriter
or such controlling person.
(b) Each holder of Shares which are included in a registration
pursuant to the provisions of this Article VIII will indemnify and hold
harmless CO3, any controlling person and any underwriter from and
against any and all loss, damage, liability, cost or expense to which
CO3 or any controlling person and/or any underwriter may become subject
under the Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with information furnished by
such holder.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Article of notice of the
commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the
indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which
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would prevent counsel for the indemnifying party from also representing
the indemnified party, the indemnified party or parties will have the
right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the
indemnified party has employed counsel in accordance with the proviso
of the preceding sentence, (ii) the indemnifying party has not employed
counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the
commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the
expense of the indemnifying party.
8.06 REGISTRATION RIGHTS OF TRANSFEREES. The registration rights
granted CYBE pursuant to this Article VIII will also be for the benefit of, and
enforceable by, any subsequent holder of Shares, whether or not any express
assignment of such rights to any such subsequent holder is made, so long as such
subsequent holder acquires at least forty percent (40%) of the Shares then
outstanding. In the event of a transfer of less than 100% of the Shares, any
action or election contained in this Article VIII that is, or may be, taken by
CYBE will be effective upon election by holders of a majority of the Shares then
outstanding and held by person entitled to rights under this Article VIII.
ARTICLE IX.
MISCELLANEOUS
9.01 EXPENSES. Except as expressly provided for herein, each party will
pay all expenses incurred by such party in connection with the transactions
contemplated hereunder, including expenses incurred in negotiating, executing
and delivering this Agreement (whether the transactions contemplated hereunder
are consummated or not).
9.02 AMENDMENT AND WAIVER. This Agreement may not be amended or waived
except in a writing executed by the party against which such amendment or waiver
is sought to be enforced. No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to modify or
amend any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement. The failure of either party to enforce a
provision of this Agreement shall not be construed as a waiver of such
provision.
9.03 NOTICES. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
days after being mailed by first class mail, return receipt requested, or when
receipt is acknowledged, if sent by facsimile, telecopy or other electronic
transmission device. Notices, demands and communications will, unless another
address is specified in writing, be sent to the address indicated below:
Notices to CYBE: with a copy to:
--------------- --------------
CyberOptics Corporation Xxxxxx & Xxxxxxx LLP
Attention: Xxxxxx X. Xxxxx Attention: Xxxxxx X. Xxxxxx
0000 Xxxxxx Xxxxx Xxxxx 000 Xxxxx Xxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxxxxxxxx 00000 Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Notices to CO3: with a copy to:
-------------- --------------
CyberOptics Communications Corporation Xxxxxxxxxxx Xxxxx & Xxxxxxxx LLP
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Attention: Xxxx Xxxxxxxx Attention: Xxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx Xxxxx 00 Xxxxx Xxxxxxx Xx., Xxxxx 0000
Golden Valley, Minnesota 55416 Xxxxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
9.04 ASSIGNMENT. This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this Agreement
nor any of the rights, interests or obligations hereunder may be assigned by any
party hereto without the prior written consent of the other party hereto,
except: (a) as otherwise provided in this Agreement; or (b) to an Affiliate of a
party; or (c) to any acquirer of all or substantially all of a party's business,
or to any acquirer of a product or product line for which a license is granted
by one party to the other party in this Agreement; provided, however, that such
Affiliate or acquirer of CO3, or such acquirer of a product or product line of
CO3, may not be any Third Party that manufacturers, licenses, sells or otherwise
deals in any product, software or service in the Inspection Equipment Market.
The aforesaid Third Party assignment restriction shall apply to any and all
subsequent assignments by permissible assignees in the future.
9.05 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
9.06 COMPLETE AGREEMENT. This Agreement and the other documents
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
9.07 COUNTERPARTS. This Agreement may be executed in several
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
9.08 GOVERNING LAW. The internal law, without regard to conflicts of
laws principles, of the State of Minnesota will govern all questions concerning
the construction, validity and interpretation of this Agreement and the
performance of the obligations imposed by this Agreement.
9.09 NO OTHER RIGHTS OR LICENSES. No rights, releases or licenses,
express or implied, are granted or given by either party except as expressly set
forth in this Agreement.
9.10 COMPLIANCE WITH EXPORT LAWS. Both parties agree to fully comply
with all U.S. export laws and regulations (including, without limitation, the
Export Administration Regulations and the regulations of all applicable U.S.
agencies) with respect to their dealings under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CO3:
CYBEROPTICS COMMUNICATIONS
CORPORATION
By:
-------------------------------
Name: Xxxx Xxxxxxxx
-----------------------------
Title: Chief Operating Officer
----------------------------
Date:
-----------------------------
CYBE:
CYBEROPTICS CORPORATION
By:
-------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------
Title: President & CEO
----------------------------
Date:
-----------------------------
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